Paper Money and Banking
IN THE UNITED STATES
PROVINCIAL AND CONTINENTAL PAPER MONEY.
to which is prefixed
principles of the system
with considerations of its effects on
morals and happiness.
the whole intended as
a plain exposition of the way in which paper money and money corporations, affect the interests of different portions of the community.
William M. Gouge
From certain remarks which have been made on the floor of Congress, the idea appears to be entertained by some that this Short History of Paper Money and Banking, and the Inquiry thereunto prefixed, were written while the author was in the employ of Government, and perhaps to meet some exigency which arose in the administration of Gen. Jackson, or that of Mr. Van Buren. No supposition can be more erroneous. The work was written in the years 1831 and 1832, while the writer was a private citizen of Philadelphia, and the first edition was issued from the press in February 1833, nearly two years before he was in any way connected with the public service. It was not written to subserve the views of any statesman or any political party, but simply, as set forth in the title page, to give "a plain exposition of the manner in which paper money and money corporations affect the interests of different portions of the community." He who reads the work under any other supposition, will not do justice either to himself or to the author.
At that time the bank question had not become a party question. It is so but imperfectly even now. But it then attracted comparatively little attention, and of the few who did think seriously about it, and who agreed with the writer in opinion, as many perhaps were to be found in one party as in the other.
The only other objection which has been made to the work, and which it is deemed necessary here to take notice of, is, "its want of method." This objection was never heard in America, till it had been made in Europe. It is not at all surprising that a European critic should raise such an objection, for he can know but little of the difficulty of writing the history of a banking system, not having one centre, as in his own country, but having nearly as many centres as there are States and Territories in the Union. The few Americans (they are not many) that have repeated this objection, have not, it is presumed, duly reflected on the embarrasments attendant on a first attempt to reduce to something like order the multitude of facts which then existed in chaos-like confusion.
As this objection has, however, been made, it is proper to give some statement of the plan of the work, and of the circumstances under which it was written.
The writer started with the design of making a small book -- a very small book; if possible, one of only one-fourth of the size of that which was ultimately produced. Still he wished it to be full enough to carry conviction to all whose minds were open to receive the truth.
His hope was to accomplish this by a simple analysis of the banking system. In the first draft of the work, the historical sketch filled only part of a chapter. As he proceeded he found that further historical illustrations were necessary, and the work gradually swelled to its present size and form.
In the first part, which contains the analysis of the system, he made it a rule, wherever it was possible, to illustrate each general principle by some particular fact. There is no other way in which to make general principles cognizable by many minds. The facts thus introduced in the first part, he considered it unnecessary to repeat in the second part, or history proper, unless where it was required to show the connection of events.
In a work of this kind, the order of cause and effect is of far more importance than the order of time. The order of cause and effect was what the writer endeavoured to observe; yet, without departing from his plan, he was able to give events in the order of time for a period of more than two hundred years, or from the date of the first settlements in Virginia down to the year 1820. At this period, the banking system being broken into fragments, he could do no better than sketch the history of these fragments as they were found in the principal divisions of the Union. The main object in view was not thereby in the least impaired, as an opportunity was afforded of mentioning some facts which were strikingly illustrative of the system, but which would, if introduced in previous chapters, have broken the thread of the narrative. For such episodes as these, precedents are to be found in the pages of the most eminent historians. Without occasional resort to them, much that is necessary for the proper understanding of the effects of any system of polity, must necessarily be omitted.
After this it was possible to resume the order of time in the conduct of the narrative, and the history was regularly brought down to the year 1832. Still there remained some facts with which it was desirable the reader should be made acquainted, and as these could not be introduced previously without breaking some important links in the great chain of causes end effects, they were thrown into the chapter headed "Extent of Banking Operations at different periods," and into others with different titles.
Soon after the Westminster Review brought the objection of "want of method" against the work, a new edition of it was called for. The writer then carefully considered if he could, by recasting it, make it better serve the object in view, that is, more effectually show "the manner in which paper money and money corporations affect the interests of different portions of the community." He found it would be very easy to make changes, but he could not satisfy himself that those changes would be improvements. He therefore suffered the book to remain in its original form.
Some other particulars in the plan of the work require notice. Some minds are governed solely by the authority of great names. The most lucid analysis, illustrated by the most striking facts, will not satisfy them. Knowing this to be the case, whenever he could find that any man of eminence in any party had expressed sentiments similar to those entertained by himself, the writer gave the words of such man in preference to his own. --Hence the multitude of quotations in which the book abounds. This array of authorities was of more importance eight years ago than it is at present: but even now it would not be judicious to dispense with it.
Aware of the delicate nature of the ground on which he was treading, the writer made it a rule, always, when practicable, to give important events in the words of eye-witnesses, and to make his quotations with so much exactness as to leave even grammatical blunders uncorrected. The labour of weaving together a multitude of passages from writers of unequal talents, so as to make a readable book of the whole, was very wearisome. It would have been far easier for him to have written down the facts in his own language as he had them then in his own mind, and perhaps he could have given them in more graphic form. The advantage of unity of style would at least have been secured. But the plan he adopted has not given him cause for regret. Though the work has now been eight years before the public, and many thousand copies have been circulated in different ways, he knows of but a single attempt to invalidate any of his historical statements, and that attempt was of such a character as to be deemed unworthy of attention.
The work has perhaps been more extensively circulated in America than any other politico-economical production; and has attracted some attention in Europe. The noted Wm. Cobbet, published, in England, a mutilated, and, in some other respects, incorrect edition of the second part, under the title of The Curse of Paper Money. He prefixed to it a preface singularly illustrative of his own character, commending the book, and abusing the author, of whom he knew nothing. --At Brussels, a very excellent abridgement of the work has appeared in the French language, in La Revue Universelle.
The writer had little expectation of his work meeting with such a reception. He could find no bookseller in Philadelphia who would publish it, though he was willing to give to any one who would undertake it, all the profits of the first edition. He was compelled to print it at his own risk, and be, in a manner, his own publisher. He had bestowed months of labor on it, had taken great care in making his analysis of the system, in preparing the history, and in arranging his authorities, yet such was the state of public opinion at that time, that, after making a conditional bargain with a printer, he walked with the manuscript in his hands around a whole square, debating in his own mind whether he ought not indefinitely to postpone the publication. He has never regretted having come to the resolution to publish, but he has regretted the omission of several chapters of the original, especially one showing the connection between paper money banking and public debt. The work having been stereotyped, it is desirable that there should be no unnecessary diversities in the different editions; and therefore these chapters will not be restored to their original place. Room will, however, be found for them in The Journal of Banking.
What was in previous editions called "a preface," will, in this, with more propriety, be called "an introduction." If it should be found necessary to make any other changes of any moment, the reader will be duly advertised thereof.
Philadelphia, May, 1841.